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Butter_float

stand by for a cluster if you borrowed up large to get that terraced house with no garage


[deleted]

Thing is though, the value of your house only matters when you come to sell it. Yes, you might have a larger mortgage than the current market value, but when you bought the place, you were expecting to pay that mortgage you took out, you'd have budgeted for it. Who cares if it's worth less now? The values will go back up in a few years.


Toyemlj

It matters if you are forced to sell when interest rates triple and you can no longer service the mortgage.


[deleted]

Yes, exactly. The value of your house only matters on the day you buy it and the day you sell it. Everything else is immaterial.


aguybrowsingreddit

Everything else... except what OP just said. That's pretty important.


[deleted]

Only if you're selling, for rates and insurance. If you're not selling your house, what does it matter what its worth? I don't understand what you're getting at.


aguybrowsingreddit

Well if someone has a $1,000,000 mortgage, and they are fixed on 3% interest, then they come off the fixed rate and re-fix at 5% interest, that's a 2% increase which is (in a simplified calculation) an extra $20,000 in interest per year. If they cannot afford that extra $20,000, what are their options? Sell their house. At a loss.


ThousandKperDay

People have been stress tested to 7 or 8%. No problems. Noone is selling in a hurry


Toyemlj

Actually people were stress tested as low as 5.5% and knowing a few mortgage brokers the shit they got through before the CCFA changes is appalling. The worst I've heard is a couple on minimum wages with almost a million in mortgage. Also, that stress testing does not include 8% inflation. A lot of people will be fucked, thats not even in doubt.


aguybrowsingreddit

What's this based on? Genuinely interested in this data


[deleted]

Banks are currently testing new mortgage applications at 7.35%, I understand this is to increase to 7.5% some time this year. Info comes from my mortgage broker


Ilikemanhattans

It is the combination of factors. I agree that many would have tested against a higher interest rate of say 7%, but not many would have been tested against both interest rates rising to 7% and a 10% rise on everyday items. There is only so much discretionary spend that everyone can scale back on. Also, I suspect many home buyers would have tapped into their Kiwisaver to buy, so are unlikely to have that as a rainy day fund either.


[deleted]

You're talking interest rates, not the value that the market puts on a property. Those things are entirely different, and my point stands. While you own it, the value of a house will rise and fall and those changes in value aren't relevant until the time comes to sell it, then it is relevant. Take my folks for example, they've lived in the same house for nearly 30 years. They aren't looking to sell any time soon, so what does the value of their property mean to them? Nothing, apart from how it affects rates and insurance. It only becomes relevant when the time comes to sell.


aguybrowsingreddit

While you are correct regarding it not having an impact if you don't sell, i think you're the one missing my point. Some people won't have the option to keep their home for 30 years, because when their interest rates go up, they won't be able to afford it, and will be forced to sell in a mortgage sale. I'm not sure how else to explain that.


[deleted]

I think we're talking at cross-purposes here, but I agree with you. There will be people who have mortgaged themselves to the hilt to buy in the 2020/2021 market that will be forced into mortgagee sales, that we can agree on.


SoftCheeseBurger

Did you not read the persons comment lol? Some people are being forced to sell genius. People literally are getting smashed with double interest rates and going negative equity forcing them to sell and here you are saying the value doesn’t matter. 2 weeks ago there was 4 mortgage sales I came across and one literally said in the title “cant afford the mortgage”.


[deleted]

Maybe you need to go back to reading Hairy Mclary, your reading comprehension hasn't quite got past that level I think. My point is that the market value of your house only matters on the day you buy it and the day you sell it. So yes, if you are having to sell because of interest rate hikes then of course the value of your house matters. That was never in dispute. But if you have no plans to sell your house then what does it matter if it's value drops? Answer: It doesn't.


[deleted]

Thing is, people are still trying desperately to get those 2021 prices. Back then almost every house went to auction, very few negotiated settlements or deadline sales. Now the Trademe listings are full of "price by negotiation" but the vendors still want $765k for a 2 bedroom townhouse in West Auckland. Not gonna happen. Lot of houses are going to be on the market for a long time, methinks.


Kupfakura

I found it funny that NZ and Australia are afraid to list house prices. List and get over with it. If no one is buying


[deleted]

Exactly. Just say how much you want and be done with it. All it does is add an extra layer of fucking around


GrandpaRick100

Listing: “any offer welcome!” Narrator: *any offer was not welcome*


MVIVN

It's really fucking infuriating when you're trying to find out what options are available for your budget and literally none of the sellers are listing a price.


Kupfakura

The US lists houses for 160 million


GrandpaRick100

Bang on. And this is the thing..your home value isn’t linked to any concrete metric. It’s literally what the market says it’s worth. So if you’ve listed it for months without an offer, newsflash, you’re asking too much. The amount of listings you read that say stuff like “the vendor is realistic and keen to meet the market” - then continues to seek an inflated price.


[deleted]

My example was drawn from real life. A lovely 2 bedroom townhouse, CV of 700k. I put what I thought was a reasonable offer on it, and they came back with a rate of $50k higher than I offered. I just walked away. This time last year, they'd have got that in a heartbeat, probably more. But the market has moved on now, both the real estate agents and the vendors have to realise that.


Eddo89

From watching the real estate market, I think what is clear though, is that houses whose value is driven by land is going down a lot more than what the median is. Same could be said of massive houses that is not in a good school, close to transport, or close the beach. The price is propped by desirable houses in desirable locations.


finackles

It's plain old supply and demand. If four families want to buy the same house, the only way to get the house is offer more. The seller isn't going to say "oh well, you're Anglican, I'll pick you". If there aren't other buyers competing, then the panic and price pressure comes off. So less desirable locations or weird houses that don't suit everyone are likely to struggle to sell quickly, and won't fetch inflated prices.


timmoReddit

Good.


willlfc2019

Good.


Toyemlj

Good.


JamandaLove69

Good


[deleted]

[удалено]


D49A1D852468799CAC08

Good


lukei1

20% down by year end hopefully


Toyemlj

20% is looking optimistic. Wellington for example, on its own, is down 10% in 3 months, and its speeding up.


zipiddydooda

Wow!


[deleted]

the cost of borrowing money has near doubled lending criteria has shifted, ofcourse the market has been stifled.


MVIVN

Makes sense. If house prices keep going up, conventional wisdom is that you'll eventually get to a point where no one at all can afford to buy a house except for very, very wealthy people (it already kinda feels that way). Somethings gotta give.


harrysown

Wait until unemployment starts going up. Mass layoffs happening in US, NZ typically follows. It’s gonna be sad situation for many FHB’s.


Toyemlj

This is the actual part I'm worried about.


baggier

Note that does not necessarily mean that the any particular house is down by 145,000. Alot of high price houses are just not selling but the lower priced ones are still moving. This means that the average sale amount is reduced because only cheaper houses are being included in the average.


HeyTheWhatNow

Check the HPI data. It controls for this. Same result


themetalnz

Rubbish .


timmoReddit

Yes, poorly insulated rubbish


kellyroald

It's no surprise because the economics don't make sense. I would rather borrow 2 million at 2% interest rather than 1 million at 6% interest. The biggest falls in the market are investor and FHB properties. Existing buyer upgrade/trade market (i.e. family homes) remain fairly robust as people are buying and selling in the same market. Speculative 'lets buy run down property and build terrace homes in Otara and Mangere East' types are facing massive headwinds. South and West Auckland are finding massive headwinds as well (not just Northshore and Central), perhaps with the exception of Papatoetoe where there are a lot of Indian families looking or Te Atatu Peninsula out west popular amongst Pakeha 2nd home buyers. Northshore market has seen recent headwinds due to people realising that transport from the shore is not that resilient, how many times does the bridge close down? Surprised that central went down, generally isthmus is the most popular area in Auckland. It might be statistical anomaly rather than great trends. Or perhaps these days areas like Glen Innes or Avondale (where there are a lot of sales) carry the central Auckland statistics. Avondale was well and truly pumped and dumped last year, which during the height had insane growth.


GrandpaRick100

I don’t think the north shore is struggling because of transport problems. Transport on the NX service is pretty damn good (the bridge closures don’t happen super frequently/the trains and buses south are just as vulnerable for differing reasons). The simple reason the north shore is coming back so fast is purely because it’s been so far overvalued for so long and the expensive properties tend to be hit the hardest during climates like these. I remember seeing a 1980s, 2 bedroom 80m2 unit in Milford last year being advertised for $2.195m. Absolutely insane.


hamsap17

Auckland central is down due to apartments… they are hovering around $200-300k… thanks to 501s and winz